House approves bill ending mortgage assistance program

The House on Thursday passed legislation that would end the Federal Housing Administration's home mortgage assistance program. 

In a 256-171 vote, the House approved the legislation after a contentious debate in which Democrats said the Republicans are shutting off much-needed aid to struggling homeowners.

Eighteen Democrats supported the bill. Only one Republican, Rep. Joe Heck (R-Nev.), voted against the measure. He said he was doing so because of the continuing mortgage problems facing his constituents.

With House passage, the bill goes to the Senate, which is not expected to take up the bill at all. The White House this week said it would veto the bill if it were presented for signing, and would veto a bill up in the House on Friday that would end the emergency mortgage relief program in last year's Wall Street reform law.

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Republicans argued that terminating the program would save $8.1 billion, none of which has been spent so far. 


Part of the Republican argument against the FHA program is that it has been used to refinance just 44 mortgages, after the Obama administration said it expected up to 1.5 million mortgages to be refinanced. House Financial Services Committee Chairman Spencer Bachus (R-Ala.) was one of many who argued that the underperforming program needs to be cut, while other Republicans noted during the debate that the FHA program was never authorized by Congress, and was created by the administration with unused money from the Troubled Assets Relief Program (TARP).

Bachus argued more than once that ending the program would help reduce the debt, and ease the debt burden on future generations.

"We're talking about these children," Bachus said, standing next to a picture of elementary school children. "These children cannot afford a future where the federal government spends $8 billion a day more than it takes in."

Rep. John Garamendi (D-Calif.) argued concern for children should lead to a decision to keep the FHA program intact, as it will help families from being kicked out of their homes.

"What is it you are offering these children?" Garamendi asked. "The opportunity to be homeless, that's what you're offering."

Garamendi and other Democrats argued that the FHA program is still in its early stages, and that ending it now would deny hundreds of thousands of homeowners much-needed mortgage relief.

House Financial Services Committee Ranking Member Barney Frank (D-Mass.) spent considerable time during the debate trying to dispel the Republican argument that of the $8 billion obligated to the program, $50 million has already been dispersed to finance the 44 mortgages that have taken advantage of the program. Frank said the $50 million has been dispersed, but sits in a fund that will be used to pay for defaults, and is not the actual cost of refinancing 44 mortgages.

Frank also spent time at the start of the debate questioning the desire of Republicans to cut spending, by noting their support for millions more in agricultural subsidies. Frank called these subsidies an agriculture "entitlement," and specifically pointed to Republican support for $150 million in annual payments to Brazil's cotton industry in order to settle a U.S.-Brazil trade dispute.

Republicans raised several points of order against Democratic amendments to the bill. This includes one from Rep. Carolyn Maloney (D-N.Y.) that would have identified the number of underwater mortgages in each state, more than 10 million in total, and added language saying Congress is not suggesting a replacement program.

Points of order were also raised against amendments that would require a study on how to fix the FHA lending program, and replace the current program with one allowing underwater borrowers to refinance at a 4 percent interest rate under the FHA.

By the same process, Republicans rejected non-germane amendments that called for the prosecution of those responsible for the mortgage meltdown, as well as one to hold Wall Street bonuses in escrow accounts so they people would not immediately benefit from these bonuses.

By a 184-243 roll call vote, the House rejected an amendment from Rep. Stephen Lynch (D-Mass.) that Democrats said would clarify that FHA can still promote mortgage workout arrangements between homeowners and lenders.

In a 278-147 vote, Republicans did accept an amendment from Rep. Maxine Waters (D-Calif.) that requires FHA to announce on its website that the mortgage program has ended, and that people should contact their member of Congress if they need assistance and contact their lender or servicer if they need help refinancing. The House also accepted a Republican amendment to ensure that money saved by repealing the program goes to reducing the deficit.

-- This story was updated at 4:52 p.m.